Geopolitical Tensions Boost U.S. Dollar and Safe-Haven Assets Amid Global Uncertainty

The U.S. dollar surged following Israeli strikes on Iran's nuclear facilities, sparking investor demand for safe-haven assets like gold and the Swiss franc. Amidst geopolitical turmoil and economic uncertainties, the rising tensions add pressure on global trade and inflation, influencing investor sentiment and market dynamics.

The U.S. dollar surged on Friday following Israel's military strikes on Iranian nuclear sites, which prompted a rush towards safer investments and led to rallies in the Japanese yen, Swiss franc, and gold. Israel's decision aims to curb Iran's nuclear ambitions, further escalating geopolitical tensions.

As U.S. and Iranian delegations prepare to meet in Oman for crucial discussions on uranium enrichment, Israel's unilateral approach underscores the complex global dynamics at play. This geopolitical turbulence compounds existing market uncertainty, which has influenced global trade and inflation concerns.

Investors responded by snapping up U.S. Treasury bonds, lowering yields, and buying gold. Despite recent gains, the dollar index remains at its lowest level since early 2022, amid broader economic trends and looming central bank decisions from major economies like the U.S., Japan, and the UK.

(With inputs from agencies.)